— from Alex MacLeod —
It may come as a bit of a surprise that we OPALCO ratepayers forked over nearly $400,000 in compensation two years ago to Foster Hildreth, our general manager.
What we’re paying him today isn’t known because OPALCO doesn’t say. The only time it becomes public is when an IRS form it must file as a tax-exempt organization is released, and the most recent one is more than a year old.
What makes Foster’s pay so shocking is that it exceeds what the head of Seattle City Light — the highest paid Seattle city employee — is paid. Her pay is $340,000, this year, and she heads the 10th largest public utility in the country with nearly a half-million customers, several dams and almost 2,000 employees.
If Foster’s pay has increased since 2017 at the same rate it had his first two years, he’s being paid more than $440,000 this year while running an electric coop with about 13,000 customers and 50 employees.
If OPALCO were showing strong financials — especially holding our electricity rates in line with the costs to OPALCO of the electricity, and having increases in debt at least follow management’s forecasts — the board could point to something to justify Foster’s excessive pay. But neither is the case.
Rates have risen more than 21% from 2015, when Foster took over, to now, much more than what OPALCO has paid BPA for that electricity.The average monthly OPALCO bill during his tenure rose to $152. 25 from $125.77. (This is in a county where about one-third of the population, while employed, are barely eking out a living.
Debt has grown even faster, nearly 25%, much of it going for additions and improvement to OPALCO’s “grid infrastructure,” mostly to support Rock Island Communications, not electric customers. OPALCO’s debt now stands at about $60 million, and the annual cost of that debt has risen about 60% since Foster took charge, to almost $1.8 million. (The debt is forecast to grow to $67 million, at an annual cost of $2.2 million, in 2023.)
And speaking of Rock Island, OPALCO’s wholly owned subsidiary, the picture is no better. It continues to lag well behind its forecasts, piling up big chunks of debt along the way, debt that is guaranteed by OPALCO ratepayers. That debt started with a $7.5 million loan from OPALCO and this year is expected to hit $25 million. In 2017, it said it would be able to pay for its own operations by the end of this year. This year it predicts it will be able to do so in 2021.
In the meantime, OPALCO, by guaranteeing its loans, is picking up the tab. By 2023, OPALCO’s consolidated debt (including Rock Island) is expected to exceed $90 million.
All of this — including Foster’s excessive pay — can be traced to a go-along board that trusted management’s forecasts despite its annual failures to deliver them. In a well-run cooperative board, it would have led rather quickly to finding new leadership. At OPALCO, it has just led to higher pay.
The OPALCO board meets next at 8:30 a.m. June 27 at its Friday Harbor conference room. It might be a good time to start asking the board some hard questions.
(Alex MacLeod is a longtime OPALCO member who lives on Shaw Island.)
Mr. MacLeod continues to get his facts wrong.
The OPALCO GM was paid a base salary of about $240K in 2017 and ~$40K of that was his Rock Island salary, the wholly owned subsidiary that he also leads. The lion’s share of the difference between the actual base salary and MacLeod’s assertion is the actuarial (estimated) value of benefits (health, retirement).
Not only does Hildreth make less than the GM of Seattle City Light, he manages two companies. The cost savings above hiring a separate CEO for Rock Island are significant.
Read the Form 990 for yourselves – OPALCO has a transparent library of governance, financial and board materials on it’s website: https://www.opalco.com/resource-library/#rlffinanceannualbudgets
The OPALCO Board is a diligent, well-informed and engaged group of qualified co-op members who give a full, thoughtful and critical study to every issue before making decisions that affect the membership. In the case of compensation, the Board conducts a comprehensive study of comparative salaries and industry compensation standards and reviews the performance of the GM on an annual basis.
OPALCO is the envy of co-ops across the nation. Most utilities are scrambling to modernize their grids to be able to manage their systems efficiently and prepare for greater integration of renewables and consumer participation in the coming transactive energy environment. OPALCO has cultivated – though hiring and training within – a top notch team that is up to the task.
OPALCO pays a living wage to all of its employees and must remain competitive in the utility industry to retain the highly-trained, quality employees required to run a modern utility that provides power to twenty remote islands. This makes OPALCO’s compensation package highly desirable in San Juan County. Job openings are posted at: http://www.opalco.com/careers.
Exactly the pattern of behavior one would expect from a monopoly….
Yes, by all means do as Ms. Olsen suggests: look at the 2017 Form 990. She us correct that Foster’s “base compensation” is $239,000. I’m not sure where she gets the $40,000 paid for whatever role he plays at Rock Island — it looks more like a little less than $10,000 — and when I asked her to explain other elements of his compensation, she refused. But the bottom line is clear: his 2017 compensation — money either paid directly or deferred — totals $63 shy of $400,000.
It is also noteworthy that Ms. Olsen leaves unquestioned the facts that are at the root of the ridiculousness of his pay: the continuing failure of management to manage to forecast ay either OPALCO or Rock Island and the massive debt racked up that falls of the cooperatives 13,000 members to repay through higher rates.
I misspelled Olson’s name. I’ll do better.
Is Sarah Huckabee ghost writing for OPALCO now?
Using cost savings and Rock Island in the same sentence is laughable. As though we members should feel so grateful for these so called “cost savings” while our electric bills and co-op debt have skyrocketed.
At some point the Board is going to spit out the kool-aid and realize these intricate and carefully procured Cost of Service Studies and Integrated Resource Plans are nothing more than fictitious documents to pre-fabricate and promote an agenda, which wrongly, wastefully, and blindly prioritizes a fiber optic grid as being some kind of essential infrastructure. By comparison, Maui Electric is at 38 percent renewable generation, and they aren’t wasting their money and breath on a fiber optic grid, instead they’re replacing old poles, upgrading substations, and maintaining lines. It’s boring, but that’s the utility business. OPALCO isn’t even close to one full percent, of renewable generation on the grid, so please stop all this nonsense. It’s quite literally costing the membership millions of dollars.
Happy Father’s Day and if you’re having trouble keeping up with you skyrocketing OPALCO bill, please call them to see if you qualify for rate assistance: 360-376-3500.
“The lion’s share of the difference between the actual base salary and MacLeod’s assertion is the actuarial (estimated) value of benefits (health, retirement).”
I don’t think that Mr. McLeod was discussing “base salary.” He seems to be discussing total compensation. The concept of base salary is meaningless when a considerable portion of total compensation is paid in the form of health benefits and retirement contributions. If it’s true that the individual in question receives almost $160,000 in health, retirement, life insurance and related benefits, why not say so and explain why? The unavoidable truth appears from the materials cited to be that total annual compensation received by this individual is almost $400,000.
From Alex McLeod’s Guest Ed:
” By 2023, OPALCO’s consolidated debt (including Rock Island) is expected to exceed $90 million.”
Is this true? If so, that is a scary and shocking amount of debt. Who will pay?
I’m still trying to understand why RockIsland was touted as such a good investment. The OPALCO members are going to have to pay for this debt, some way or another. The date that R.I. is supposed to be self-sustaining enough to at least pay the principal keeps being pushed back and back, while the interest amount grows higher and higher, making this an unsupportable debt.
Not everyone gets the help that I as a low income OPALCO member can get. I can squeak by, thanks to the assistance I’m receiving – but what about the rest of the people who can’t because they make more than the cap on income?
Sorry but this is just whining… if you actual compare the compensation structure of OPALCO GM to that of all other coops in the state he is below the average of I believe $250k base and well below the average in OR which is over $265k. I would be fairly certain that the balance, benefits, retirement etc is all very similar given coops all buy such things from the same entities. You would also be very wrong to think you will get a GM for less… they are in a lot of demand given the amount of retirements the electric industry is seeing nation wide and a lack of overall qualified talent coming into the industry.
Foster is doing an incredible job managing two business each with their own set of challenges and opportunities.
Gerry, you might want to throw a disclaimer in there mentioning that a few of those decisions made by Foster were highly lucrative for you personally…
Luther, not sure what decisions matter relating to my comments. I am stating a few basic stats and my knowledge of the industry as a whole. I talk with coops nationwide in my current role and I see the demand for quality talent at all levels within the industry as it grapples with increasing change, new demands and numerous opportunities. It is an experience mix not easily found, especially in as tight a labor market as we have now.
Electric engineering talent with strong financial experience can make a whole lot more in other industries. As usual with so many things it is easy to freak out about a headline number, but when you peel back the layers you always see it is more complex.
Foster is getting a fair rate for his position that is based on all the normal factors any board or management would use to determine compensation value for the position.